E FALLACY OF DANGER 
FROM GREAT WEALTH 



By HARRY HUBBARD 



THE FALLACY OF DANGER 
FROM GREAT WEALTH 



HARRY HUBBARD 
II 



BOSTON 

PRESS OF GEO. H. ELLIS CO. 

1913 



Us 



Copyright, 1913 

BY 

HARRY HUBBARD 



>CI.A354290 



THE FALLACY OF DANGER FROM 
GREAT WEALTH. 



In civilized countries men save — that is, 
set aside out of their income — wealth not 
to be spent for their own personal needs or 
pleasures but devoted to producing other 
and additional wealth. Thus, for example, 
a farmer out of his crops saves a portion for 
next year's farm operations, a manufacturer 
saves enough to build a factory and operate 
it, and several men, united as a corporation, 
save enough to build and operate a railroad. 
One of the chief things that distinguishes civi- 
lization as we have it, with all its modern 
comforts and happiness, from savagery, with 
its want and misery, is the capacity to save 
and invest. We are benefited by the accu- 
mulated savings and investments of preced- 
ing years, yet most wealth (except land, 
minerals and other natural objects) would 
perish very soon if it were not continually 
replaced. For example, our railroads in the 
United States have been practically all made 



4 THE FALLACY OF DANGER 

over — road-beds, rails, bridges, stations, loco- 
motives and cars — within a generation. It 
is so in nearly all other industries. 

In our complex modern life, saving and 
investing take place in many ways. For 
example, money saved and deposited in a 
savings-bank finds its way out in a loan on 
mortgage to help build a house, a factory, or 
a store; or it pays for bonds, and the proceeds 
are put into a railroad or some public work, 
as a school-house, dock, street, etc. In any 
and all these cases the money deposited in 
the savings-bank goes ultimately to employ 
labor and pay wages. So money deposited 
in any other bank or trust company is loaned 
out to merchants, manufacturers, and others, 
and similarly goes to pay wages. 

The same is true of money saved and in- 
vested in regular course of business in stocks 
or bonds. Corporations engaged in great 
business, as railroads, issue and sell their stock 
and bonds in order to obtain money to carry 
on their work. All this money goes to employ 
labor and pay wages, or, if materials are bought, 
the money goes to pay for them and the 
labor engaged in producing them — in the 
end substantially all to labor. 



FROM GREAT WEALTH 5 

So it is not possible to conceive of money 
saved and invested in regular course not 
going, substantially all of it, to the employ- 
ment of labor and the payment of wages. 

No rich man in our day hoards his money. 
All his income (except what he spends for 
personal needs and pleasures and what he 
gives to others for similar purposes) goes into 
investments in some form, and ultimately all 
goes to employ labor and pay wages. 

It is one of the natural economic laws, 
as beneficent and as immutable as the law 
of gravitation, that rich men who invest their 
money in order to grow richer are really trus- 
tees of their wealth for the benefit of labor, 
whether they so regard themselves or not. The 
only way a rich man (or any man for that 
matter) can repudiate such trusteeship is by 
wasting his wealth by using it in riotous living 
for himself or for others. He cannot possibly 
avoid such trusteeship for the benefit of labor, 
so long as he saves his money and invests it. 
He has the legal title, but the money must be 
paid out for labor. The danger to society is 
not when the rich man desires to save and in- 
vest his money and become richer, but when 
he ceases to have such desire, and begins to 



6 THE FALLACY OF DANGER 

use his money for foolish personal pleasures 
for himself or for others. The probability 
that a man who has spent his life in building 
up a fortune will turn about and do such a 
thing is very remote. 

This economic law does not depend for 
its action on the moral character of the cap- 
italist or good- will towards workmen. The 
meanest -spirited accumulator of wealth (if 
such a man could conceive great enterprises 
and carry them through), equally with the 
most benevolent, is subject to the law. It is 
a safe and sufficient protection against the 
imagined dangers of the accumulation of 
great wealth. Men clamor "danger," "dan- 
ger," yet these dangers, so much paraded as 
the capital stock of agitators and feared even 
by some good people, have never been realized 
and never will be, for this beneficent law pre- 
vents any such thing. The poorest may look 
with equanimity, or, rather, with gladness, 
because of his own personal and selfish in- 
terest, upon the increase of the wealth of the 
richest. No rich man growing richer need 
feel that he is taking from others, but rather 
he should rejoice that, as he grows richer, 
he is necessarily enriching others. 



FROM GREAT WEALTH 7 

The possessor of wealth (rich or poor) has 
the legal title to it; and he gets his living — 
that is, his food, clothing, and shelter — and 
such other necessaries or luxuries as he can 
use. He gets nothing more. And all these he 
leaves in a few short years after he has ac- 
quired them. He spends hard days and sleep- 
less nights, perhaps. Many a poor man has 
what are to him far more pleasures and better 
health. Every man to his taste. What is 
happiness? Is wealth? Do the socialists 
really think so? If they do, then why not 
struggle for it like brave men instead of 
whining like cowards? And, if they do not 
think so, why do they find fault with men of 
different tastes who do struggle and obtain 
wealth? The socialists seem to make a lot of 
fuss over a thing which they think nobody 
(themselves included) ought to wish for. 

People talk about the "danger" of great 
wealth. It seems to be always "danger," 
"danger," but no specification of any defi- 
nite thing. The danger from great wealth is 
purely imaginary. The real danger is that 
men may not save their money so as to have 
great wealth, and thus have a great fund for 
investment and wages. Natural economic 



8 THE FALLACY OF DANGER 

laws govern the accumulation and distribu- 
tion of wealth, and government may well 
hesitate before it tries to go contrary to these 
natural laws. 

One may challenge the world to show how 
there could be any system under which more 
money could be made available for wages 
than under the existing system of private 
property and the saving and investing of 
money. All there is now goes as wages. 
How could more go? Only by saving and 
investing more. It deserves consideration 
whether there ought not to be an effort to 
save more. The expenses of all classes, 
rich and poor, have mounted upward con- 
tinually. What were formerly luxuries are 
now deemed necessaries. Reliance upon pen- 
sions by private corporations or by the gov- 
ernment have taken the place somewhat of 
saving up for old age. There is a spirit of 
spending now and letting the future care for 
itself. Such a spirit ought, in the interests 
of workmen and of society, to be checked. 
So, too, for precisely the same reasons ought 
to be checked anything that will discourage 
men from saving and investing and build- 
ing up big fortunes. We have seen that, 



FROM GREAT WEALTH 9 

when these are built up, they belong by an 
inexorable law to the workmen, though the 
legal title be in the owner. To decrease them 
is to decrease the fund for wages. 

For the good of workmen no one ought to 
wish that a great captain of industry retire 
from business or have his fortune diminished. 
Workmen are interested to have him stay 
in the harness as long as possible and have 
a big fortune to invest and pay out in 
wages. Work is good for men. So is mak- 
ing wealth. To give permanent work and 
good wages is one of the finest achieve- 
ments of our modern industrial system. 
To honor those who do this is wise for 
workmen and society. In our own coun- 
try such men have been honored except by 
the demagogue and his followers. In Eng- 
land they have received titles. May the 
day be long distant when public opinion 
and public policy or any act of the govern- 
ment shall discourage the saving and invest- 
ing of money by either rich or poor! May 
the day also be far distant when we have in 
this country (as a result of any such discour- 
agement of industry) a rich, do-nothing, and 
money-spending class, instead of a saving and 



10 THE FALLACY OF DANGER 

investing class engaged in magnificent and 
beneficent industries! 

Society, and especially workmen, ought to 
be glad that some men take pleasure in 
saving and investing money and in growing 
rich; that they enjoy it, and therefore do it. 
Society ought to be glad that there are great 
captains of industry, men who can conceive 
great things and carry them to success. The 
world needs them. There are at least a thou- 
sand followers to one leader in the industrial 
world. The leaders are necessary, if big in- 
dustries, big production, and consequent big 
wages are to be had. They are as necessary 
in the industrial world as a wise father or 
mother is in a successful household. 

"Except a corn of wheat fall into the 
ground and die, it abideth alone; but, if it 
die, it bringeth forth much fruit." This is 
as true to-day as when spoken. It not only 
applies to wheat, but it is a great truth 
as to modern saving and investing. The 
only method of increasing wealth is by sav- 
ing and investing it, and this means that it 
must be paid out in wages and consumed, and 
in its place a new and increased amount of 
wealth is produced, and this process goes on 



FROM GREAT WEALTH 11 

indefinitely. A talent of money buried in 
the earth or hidden in a napkin never pro-, 
duced ten other talents or even one. 

Saving means sacrifice of a present for a 
future gain, — always has and always will. 
The savage is not always willing to make it; 
but civilized man knows how, and ought to 
make it. Envy of those who have made this 
sacrifice and succeeded in accumulating 
wealth is not becoming to a brave man. 

If wealth is dangerous, how much is dan- 
gerous? Is a million dollars? May not a 
million dollars be wasted as readily as a hun- 
dred millions? How many cases have oc- 
curred in our day of great wealth misused? 
We already have some laws against the mis- 
use of wealth, — our guardianship laws. More 
laws could be enacted along that line if nec- 
essary, and thus fully protect every one with- 
out diminishing the motive to save and invest, 
which is so necessary for the welfare of society. 

One would think, to read some things that 
have been written or said about the wealth of 
the rich, that they had their wealth in money 
on deposit in banks or perhaps locked up in 
their own safes; and that they were constantly 
adding to their "pile" thus locked up; and 



12 THE FALLACY OF DANGER 

that there was danger that they would thus 
lock up all the wealth of the world, and what 
would the poor do then? Most of the fear 
of great wealth has as senseless a foundation 
as that. The truth is that the wealth of the 
rich has been paid out, invested in business 
where it is fixed, and could not be taken back 
by the owner. He could sell it and transfer 
it to some one else, yes. But how could the 
wealth put into railroads or factories or ma- 
chines be taken back by the man who has 
invested his money in them? The railroads, 
factories, etc., must continue to exist and 
benefit workmen and society long after the 
men who have created them have passed away. 
A small part of the wealth of the rich is 
deposited in banks. But this is not "idle," 
hoarded money, as some would have us sup- 
pose. One might think, to read or hear some 
statements, that the "deposits" in a bank 
are money on hand in the bank. Far from it : 
the "deposits" are what the bank owes to its 
depositors. It is a pity the words "due to 
depositors" were not always used instead of 
"deposits," for it would save some erroneous 
thinking. The bank has loaned out about 
75 per cent, of the "deposits" of its depositors, 



FROM GREAT WEALTH 13 

and retained only about 25 per cent, in cash as 
a reserve to pay its deposits on demand. 
These loans are made to merchants, manu- 
facturers, and other business men to carry 
on the business of the world, and out of this 
are paid money for wages, and raw materials 
(these in turn being nearly all wages). No 
bank takes a rich man's money and keeps it 
as a hoard. That would be the business of 
a safe deposit company, if any one was fool- 
ish enough in these days to hoard his money 
in cash. No rich man does this. The ten- 
talent man never hides his money in a napkin. 
It is only a one-talent man who does this. 

So, then, we find that, as a matter of fact, 
when the rich man adds to his "pile," he is 
adding to his investments in productive en- 
terprises, no matter how much he adds, and 
that all of his wealth goes out ultimately in 
wages. A great "danger" to the country 
and to the poor! A "great peril"! It must 
be "controlled," and legislated against, etc., 
ad infinitum, and ad nauseam, too. 

Even if money was given away freely by 
the wealthy, this would not increase the total 
receipts of the whole number of workmen; for 
all that is saved and invested already goes as 



14 THE FALLACY OF DANGER 

wages, and if, instead of being saved and in- 
vested and thus paid out as wages, part of the 
money was given away, the workmen would 
not have more. If the gifts were not to the 
workmen, they would have less. If the gifts 
were made and consumed, and if there was no 
production by means of the gifts to replace the 
consumption, then the workmen and society 
would be worse off than if the gifts had not been 
made and the money had been left invested in 
industry, paying wages and producing wealth. 

When workmen see that a big sum is to be 
spent in anything but industry, their attitude, 
in their own interest, ought to be one of in- 
quiry. Will such sum be spent for a justifiable 
purpose? If the sum remains in industry, it 
is theirs, the workmen's, though the legal title 
be in the investor. If the sum is taken out for 
a gift to a charity, the inquiry ought to be 
whether it is justifiable? If the government 
proposes to take a sum in taxes (from the 
rich or poor), the workmen ought to inquire 
whether it is justifiable? If not, then the loss 
is the workmen's, even though the loss of the 
legal title falls on the owner. 

It is a wicked waste for a wealthy man (or 
any man) to take money from his investments 



FROM GREAT WEALTH 15 

(existing or proposed) and put it into an un- 
wise charity. 

It is a wicked waste for a government to 
take money in taxes from its people (rich or 
poor) that would be saved and invested if 
the government uses such money for any but 
necessary and useful purposes and in the most 
economical manner. Any and all waste by 
government is a direct injury to workmen, 
whether the taxes wasted come from rich or 
poor. 

If taxes are levied on the rich, it is to be 
presumed that such taxes will be paid out of 
what may be called their surplus for saving 
and investment rather than out of that por- 
tion of their income which they have been 
accustomed to spend for personal needs and 
pleasures. If this presumption is correct, 
taxes levied on the rich diminish their fund for 
saving and investment and thus diminish 
wages. Taxes levied merely to take money 
from the rich in order to make them poorer 
(if in these days such taxes are conceivable) 
would thus diminish the funds which go for 
wages. 

Not all gifts to so-called charity or benevo- 
lence are for the benefit of society. As work 



16 THE FALLACY OF DANGER 

and wages are usually better than alms, so 
saving and investing money (though it results 
in a big fortune for the owner) are far better 
for society than foolish giving. The person 
who benefits society is the man who by saving 
and investing accumulates a fortune, and not 
the family who spend and give away the fort- 
une after his death. 

From what is stated above it follows that 
whatever increases the product of industry 
increases wages. The increase of product, 
if it goes in the first instance to the capi- 
talist, increases his income, and out of his in- 
come he has more money for saving, and all 
his saving, as above explained, goes ultimately 
as wages. Thus all labor-saving machinery 
and devices are for the benefit of laborers, and 
so also all efficiency of labor in every form. 
The industrial development of the United 
States in the last twenty years, or even the 
last ten years, is an instance and an irrefut- 
able proof of this truth. 

The grand successes of our own times, and 
especially of our own country, have been in- 
dustrial. Through these successes the great 
body of the people of the country have been 
raised to a level of prosperity with high 



FROM GREAT WEALTH 17 

wages and comfortable living never before 
existing in the world. 

In earlier times in Europe the leaders of the 
people (under the various names indicating 
leadership or ability, as duke, king, etc.) 
built their walled towns and castles, and 
provided armor and fighting materials, and 
they and their followers spent much time in 
petty wars. Industry was carried on in the 
crudest and most wasteful manner as compared 
with industry in our country to-day. Pov- 
erty and ignorance and lives more animal than 
human were the rule among ordinary people. 
Even palaces of kings of a few hundred years 
ago were far less comfortable than the homes 
of workingmen in our country to-day. 

Our monuments are industrial. In the cen- 
turies past the people in Europe put vast 
labor and money into the erection of cathe- 
drals and other buildings for religious pur- 
poses. We look on these with wonder. But 
far more wonderful and more useful are our 
railroads, steamships, telegraphs, telephones, 
wireless telegraph, our factories of a thousand 
kinds and their multitudes of machines and 
tools, the power loom and spinning machine, 
the cotton-gin and hosts of agricultural 



18 THE FALLACY OF DANGER 

machinery and implements, sewing machines, 
knitting machines, automobiles, and countless 
other labor-saving devices. All these were 
the inventions and creations of men within 
about one hundred years, working under the 
existing conditions of private ownership and 
control of wealth and freedom of industry, 
where great captains of industry received their 
rewards, and men who built up industries had 
the joys and gains and honors due to their 
success. All these men, however, as above 
stated, were really trustees for the benefit of 
the public, whether they knew it or willed it 
or not. They could not benefit themselves 
without benefiting their fellow-men far more. 
There has never before been a period when 
wages have been so high as during the past 
ten or fifteen years, — a period in which there 
has been the greatest corporation develop- 
ment in the history of the world. 

We have heard much in recent years of so- 
called "reforms" in the control of wealth, — 
as if somehow society at large is to be bene- 
fited by some such "reforms." There has 
been much talk that wealth must be "con- 
trolled" in some way by the government or 
it will become "dangerous." Let us see what 



FROM GREAT WEALTH 19 

benefit, if any, is to be derived from any such 
control. 

The way to have money or wealth to use in 
the payment of wages is by saving, as already 
above explained. The government itself has 
no means of saving; for it earns no money 
(at least where the government carries on no 
industry), but receives taxes taken from per- 
sons who have earned money. Will individ- 
uals save more or less money if what they 
save is to be "controlled," not by themselves, 
but by the government? Perhaps it is not 
wise to say that all men are naturally lazy. 
But we may safely assume that most men like 
to get a living with the least possible effort. 
If, then, the government is to step in and 
"control" what a man saves and invests, 
is he going to earn enough to save anything? 
If the government is going to control a man's 
capital, — that is, all that a man can save, all 
that he earns beyond what is needed for his 
support, — is he going to earn anything beyond 
an amount sufficient for his support? Why 
should he? What would be his motive? To 
the extent that the government undertook to 
"control" wealth, there would be a tendency 
to decrease future saving. 



20 THE FALLACY OF DANGER 

But suppose the government seized existing 
wealth (without paying compensation) and 
took "control" of that, what would be the 
effect on society? Would the government 
manage that wealth better than it is now 
managed? The government is made up of 
mortal men elected to office. With all respect, 
one may ask whether they have individually, 
or as a body, proved themselves capable of 
managing big financial business. Have they 
gained ten pounds where they started with 
only one, or are they five-pound men, or not 
even one-pound men? Election to office 
works no miracle in a man. Shall the "con- 
trol" of wealth be taken from those who have 
earned it, and conferred upon those who have 
not? Shall we reverse the Bible narrative, 
and take away from the man who by industry 
and ability has gained ten pounds and confer 
the "control" of those ten pounds upon the 
man who has gained only five, or even upon 
the man who has gained none? Shall we take 
wealth from those who have proved themselves 
capable of managing it and confer "control" 
upon those who have not? Some of the little 
one-talent or no-talent men seem to want to 
take "control" of wealth away from the big 



FROM GREAT WEALTH 21 

ten-talent men. It would not be good for 
society. 

There is no magic by which government is 
able to manage things. Officials are only 
individuals, and are no wiser because they 
are elected to office; and they are not usually 
elected because of any ability they have 
shown in managing the industries of the coun- 
try. But, if they were to be elected to office 
because of such ability already shown, there 
is no reason to think they would manage 
business any more wisely because they were 
officers of the government than they did as 
individuals or as officers of corporations. 
If the government undertook the manage- 
ment of industry, then, in order that the people 
might not suffer loss through bad manage- 
ment, government would be compelled to have 
as managers the same men that now manage 
business successfully. But it would be im- 
possible for the government to get such man- 
agers. The men who have been the great 
captains of industry have not done their 
work for a salary, but because they were build- 
ing up a great business which was their own 
to manage and control, for the joy as well as 
the gain which was in the work and the sue- 



22 THE FALLACY OF DANGER 

cess. Any one who thinks that government 
could get such work from such men on a salary 
as a part of a government machine can have 
little knowledge of human nature. 

We have heard a cry that the "interests" 
shall not be represented in Congress or in 
any legislative body. If this means that no 
man who has wealth is to be elected to office, 
then is it not time to protest against any 
such doctrine? Is it not wise that able men 
shall sit in Congress? Shall we go out into 
the streets and hunt up a man who has noth- 
ing, no "interest" in anything, and elect him? 
Shall we elect men who have never had the 
ability (in our time and country with all its 
opportunities) to acquire any "interest" in 
anything? Are such men likely to make wise 
legislators? And then, if it is proposed to 
give such men "control" of the wealth and 
industry of the country, are great and good 
results to be expected? Will such men be 
able to do better for the country than they 
have been able to do for themselves? 

The assertion that government "control" 
of wealth is desirable must be based on the 
idea that the people of the country as a whole 
would thus get more good out of the wealth. 



FROM GREAT WEALTH 23 

Would they? We have seen above that sub- 
stantially all wealth saved and invested is paid 
out in wages. The more money people save 
and invest, the greater is the amount paid out 
in wages. This does not depend on the bene- 
volent disposition of the employer, but upon 
natural economic laws. Would this fund be 
increased if there was government "control"? 
Most certainly the contrary, for saving would 
be decreased if a man ceased to "control" 
what he saved. A direct effect of govern- 
ment "control," therefore, would be a decrease 
of wages. 

It is a pertinent question how far our govern- 
ment can go in its "control" of railroads and 
other corporate industries without having as 
a direct result a decrease of the amount of 
saving and investment in railroads and such 
other industries and a consequent decrease 
in the amount paid out as wages. Indeed, 
it deserves consideration whether already as 
a result of government "control" there have 
not been much smaller investments in new 
railroads and as a direct result a much smaller 
sum available for wages in railroad building 
and operation. It is reported that in the year 
1912 there were fewer miles of new railroads 



24 THE FALLACY OF DANGER 

built in the United States that in any of the 
fifteen preceding years. Much money, driven 
away from railroad investments by govern- 
ment control, has found its way into indus- 
trials. If, now, the government is going to 
"control" industrials also, what will be the 
result as to investments of savings in indus- 
trials? Will they continue? If not, there 
will be a smaller amount to pay out in wages. 
Add to the above loss the fact that a very 
large part of our country is still without rail- 
roads, and is compelled to haul its products 
to market long distances over execrable 
wagon roads, which by the way are and have 
been under the absolute ownership and control 
of the government, and constitute a striking 
example of government "control." What 
the producer and consumer have to pay per 
mile for such hauling is many times what any 
railroad ever charged its patrons. Competi- 
tion and efficiency under freedom of manage- 
ment have been the main causes of the reduc- 
tion of railroad rates to the present low level. 
The little that the railroad commissions have 
saved in rates to some shippers where rail- 
roads now exist may be nothing compared 
with the total loss that government "control" 



FROM GREAT WEALTH 25 

has brought upon the wage-earners and pro- 
ducers and consumers of the entire country, 
and the end is not yet. Moreover, what the 
railroad commissions "save" the shippers is 
not a saving in any proper sense, but a trans- 
fer from one person to another. It adds no 
wealth or wages to the community, as does in- 
creased efficiency of labor from construction 
of new railroads and improvement of old ones. 
Notwithstanding the government control of 
railroads, interest on bonds and some dividends 
on stocks are still paid to the holders. Any- 
thing short of this would be confiscation. But 
there is a deeper question than merely getting 
interest on bonds and dividends on stock 
(which dividends, by the way, are now rather 
uncertain, not guaranteed by the government 
which is in control, and in most instances 
not above interest rates, and with little hope of 
increase in the future). The greatest motive 
for a wealthy man to start a big business is 
his ability to create and control it. The 
business is his creature, his pet, his hobby. 
If, now, control is to be taken away from him 
and vested in any Tom, Dick, or Harry who 
may by appeal to the dear people get himself 
elected to office, where is there any longer 



26 THE FALLACY OF DANGER 

any motive for a man of big genius to under- 
take to create big things in railroads or other 
industries? Of course, the big railroads now 
existing must be managed, and this furnishes 
work for men of genius. But where is the 
motive to lead a big man to do in the future 
big things in creating new railroads and other 
industries such as have been created in the 
past? Furthermore, who is going to under- 
write any big new railroad when the condi- 
tions are that, if any money is to be made out 
of it in dividends, there is a government 
commission ready and willing to reduce rates 
until dividends do not exceed an interest rate, 
and with no guaranty that they will equal an 
interest rate? When both control and profit 
are no longer to belong to a great business 
leader, what motive has he to engage in the 
work? 

There are ways of increasing the funds for 
wages, and thus increasing the prosperity of 
the wage -earners, but they are not govern- 
ment control. Whatever increases the prod- 
uct of labor increases the fund for saving, 
and, if saving takes place, increases the fund 
for wages, whether it be labor-saving machin- 
ery or greater efficiency of the workman from 



FROM GREAT WEALTH 27 

any other cause. In the thirties and forties 
in the United States there was a lament that 
so many horses and stage-coaches and coun- 
try taverns were to be thrown out of business 
by the incoming railroads. What was the 
result? More people have been employed 
and more wages paid than would ever have 
been possible if railroads had not come. So 
all kinds of machinery and labor-saving devices 
in the United States have made our labor the 
most efficient in the world, and with our great 
natural resources and good climate have made 
the product immense out of which savings 
can take place. If the product goes largely 
to the workman, as it does, and is shown by 
the immense amounts paid out in wages as 
compared with what is paid in dividends or 
interest, then the workman gets the high 
wages directly in that way. Look over the 
annual report of any great railroad company, 
and see what amount is paid out directly as 
wages. Add to this what is paid out for ma- 
terials and supplies, which in turn are pro- 
duced by labor and the cost of which also rep- 
resents amounts paid out in wages. Compare 
with these figures the small amount paid out 
as interest and dividends. Consider, too, that 



28 THE FALLACY OF DANGER 

out of interest and dividends all that is saved by 
those who receive interest and dividends and 
invested is also paid out in wages, and it will 
be seen how the wage-earners are interested 
to have big enterprises exist and have great 
captains of industry to create and manage 
them successfully. Look over the annual re- 
ports of all great industries, and the same 
thing is true. Dividend and interest distri- 
butions are published in the newspapers. If 
the amounts the railroads and other big in- 
dustries pay out in wages and in materials 
(also all ultimately wages) were published 
with the same fulness, the public would get 
a much more accurate notion of how wealth 
produced by a big railroad or other industry 
is divided. The rich man cannot get even 
this small payment of interest and dividends 
without having these big amounts paid out 
in wages. 

But not all recipients of dividends and in- 
terest are rich men. A late report is to the 
effect that the Pennsylvania Railroad Com- 
pany alone has about 84,000 stockholders. 
The United States Steel Corporation also has 
enough stockholders to constitute a small 
army. The number of stockholders in the 



FROM GREAT WEALTH 29 

numerous corporations of the country runs 
up into the millions, so, also, the number of 
bondholders. Among the bondholders and 
stockholders are the big life insurance com- 
panies, savings-banks, and other institutions 
that represent millions of small investors, as 
well as millions of small holders who have 
themselves invested directly. An attack 
upon big corporations is really an attack 
upon millions of men and women of small 
wealth who have saved and invested their 
money, as well as an attack upon the wages 
of workmen. 

The savings by workmen in our country are 
immense. The sums in savings-banks, life 
insurance policies, homes and furnishings, 
and the amounts saved and invested in various 
kinds of business are enormous. Most of the 
workmen in our country have recognized the 
fact that saving is the beginning of prosperity. 
No matter how small the income, some saving 
is usually possible. Abstinence from alco- 
holic drinks and from useless or demoralizing 
amusements would furnish a margin for sav- 
ing in many instances where such expenditures 
are now made. There are cases, of course, 
where saving is not possible, and probably 



30 THE FALLACY OF DANGER 

always will be so long as men exist, where 
sickness or too large families, or some other 
cause, has made it impossible to save or even 
to live without government help or charity. 
These cases should be cared for and pitied. 
But they are the exception and not the rule. 
It is not to be imagined that because many 
people of foreign birth do not live so well, 
according to our standards, as a thrifty man 
of American birth, therefore the foreigner is 
suffering. On the contrary, he may be living 
well according to his standard and enjoying 
himself, and, what is more, saving up money 
for his family. In thousands of instances 
their savings enable them to start a small 
business, then a larger and a larger, until 
they become wealthy. Some of our own home- 
born young men might well copy such thrift 
instead of spending all their income on their 
living, including often not only food, clothing, 
and shelter, but liquors and useless and de- 
moralizing amusements, whereas they might 
save their money and get a start in the world. 
Men who have acquired wealth have paid the 
price. Some improvident men are not willing 
to pay it, and yet want to fare as well as those 
who have paid. 



FROM GREAT WEALTH 31 

Society or government might do much to 
increase wealth and wages by working with 
natural economic laws and not against them. 
Everything that prevents waste preserves 
wealth and benefits wages. Thus, if there 
were no necessity for war or army or navy, 
all such expenditures saved and added to the 
wealth of the country would be of immense 
benefit, increasing the funds for wages. So 
far as these expenditures are useless, the result 
is the same in destroying wealth or preventing 
its increase as if those engaged in such works 
were employed and paid for dumping sand into 
the sea and the product which such works add 
to wealth is nil. This is not saying that army 
and navy are not necessary, in the present 
state of the world; but it is a pity they are. 
We in America are not thankful enough that 
we do not need to waste so much valuable 
time of our young men in the army as they do 
in Europe. There young men are destroying 
wealth, while our young men are producing it. 
The different effects on wages are hardly ap- 
preciated as they should be. 

Think of the war bonds in the world, 
and one begins to realize the awful waste of 
wealth in war, to say nothing of the waste of 



32 THE FALLACY OF DANGER 

life and the failure to produce wealth on the 
part of those engaged in war. They not only 
do not produce, they destroy. Think of the 
$1,000,000,000 cost of the Boer War to Great 
Britain, and the big amounts to Russia and 
Japan in their war, — all wasted, if war could 
well have been avoided. Think what a dif- 
ferent result would have been produced if, 
instead of bonds for war, bonds had been 
issued for industry; if, for example, Russia 
could have spent her money for good roads 
which she sadly needs. 

The idea that government is benefiting 
workmen or society by taxing the rich (thus 
taking money directly from the funds that 
employ workmen in productive industry), and 
using these taxes in paying officers and em- 
ployees of the government, is utterly false, 
unless those officers and employees perform 
services which are more important for work- 
men and society than is the wealth that 
would have been produced and the wages 
that would have been paid if such taxes had 
not been collected. Cutting off all useless 
offices and requiring the greatest efficiency in 
all necessary government officers and em- 
ployees are desirable for the same reasons. 



FROM GREAT WEALTH 33 

Until money spent by government will pro- 
duce as much wealth as the same amount of 
money spent by individuals or corporations, 
the expenditures of government and the taxes 
levied on the people (rich or poor) should, in 
the interest of workmen and society, be kept 
as low as the necessary and really useful 
functions of government will permit. 

Natural law in the economic world is a 
theme upon which a volume might well be 
written. When in the natural evolution of 
civilization new economic facts or conditions 
come into prominence, some anxious persons 
become alarmed, and cry out "danger," and 
advocate legislation to avert or remove the 
danger. If such alarm and proposed legisla- 
tion are in accord with economic law, well 
and good, as for example in the case of efforts 
to have sanitary conditions of life and work. 
They are bound to succeed. But, if they are 
contrary to economic law, as in the case of 
attempts to fix by law the rate of wages or 
the price of food or the rate of income on 
capital, they are bound in the long run to 
fail. If they succeed for a time, the apparent 
success is obtained at the expense of loss in 



34 THE FALLACY OF DANGER 

some other part of the system of industry, and 
such loss is greater than any gain. 

Attacks upon private property are not new. 
Socialists and communists and other advo- 
cates of different methods of holding and 
distributing wealth have had their little day 
before the present generation. The cele- 
brated Brook Farm, for example, had a col- 
lection of really choice men and women, 
many of whom later became useful and 
famous in the world. But they could not 
endure the unnatural life of that select com- 
munity. If socialism was not possible for 
them, it is much less possible for the mixed 
multitude. One can read of failure after 
failure of such communities, and there is little 
serious attempt in our day to revive them. 

Present attacks are in a different form. 
Recently it has been suggested that taxes 
ought to be levied upon the rich for the pur- 
pose of taking away their wealth or a great 
part of it. We have also heard much to the 
effect that the government must "control" 
great wealth. Great industries are attacked 
in some instances apparently only because 
they are great. The mere greatness has 
seemed to alarm some people. Instead of 



FROM GREAT WEALTH 35 

inquiring whether there are not natural eco- 
nomic laws (without statute laws) to control 
and render harmless, and indeed beneficial, 
such great wealth and industry, some people 
have rushed headlong into a crusade against 
wealth. The great wealth and great indus- 
tries of the present day in this country and 
others are indeed novelties. Nothing ap- 
proaching them has ever before existed, so 
far as we know. Therefore, over-anxious 
people attack them. But so also the great 
wages of workmen and the great comfort and 
happiness of all classes of people are novelties 
which have come as a direct result of the 
great wealth saved and invested and the 
great industries of our day. If the fearful 
persons who are attacking great wealth and 
great industries should succeed in such at- 
tack, they would also by the same efforts 
have succeeded in reducing wages and the 
comfort and happiness of workmen and 
society. 

One would like to think that it is wholly 
zeal for the public welfare that prompts 
attacks upon great wealth and great indus- 
tries, and that ignorance of economic laws is 
the most blameworthy fault of such attacks. 



36 FALLACY OF DANGER FROM WEALTH 

It is to be suspected, however, that envy has 
been the cause of at least some such attacks. 
Then, too, some demagogues have come along 
who desired to use what they took to be 
popular prejudices as a means of getting into 
office. Politicians have not been the only 
sinners. Writers for magazines and news- 
papers, and the owners of magazines and 
newspapers themselves, have in some in- 
stances made great money gains out of their 
attacks upon great wealth. The crusade has 
been popular, and very profitable financially 
to those who have skilfully turned it into 
money for themselves. "Great is Diana of 
the Ephesians!" 

In a democracy like our own, education of 
the whole people in sound economic doctrine 
sometimes comes slowly. We once had a 
greenback craze and a silver craze, and they 
in their turn passed away, and most of their 
advocates have been forgotten. If the cru- 
sade against great wealth and great industries 
is not in accord with natural economic laws, 
such crusade also will have an end, and its 
champions, too, discredited and perhaps even 
hated by the people, will go into their deserved 
oblivion. 



SEP 18 1318 



